Buying Guides

Incisive Business Guide To Insurance

This guide from Incisive Business outlines the features and
benefits for your business from taking out business insurance.
The document is for guidance and information only and does
not constitute advice.

Buying business insurance can be a daunting task and buying the
appropriate insurance is an important part of protecting you, your
employees and your business.

This purpose of this guide is to provide an overview of the
types of business insurance available and what to consider when
looking for insurance cover for your business. You should
always seek professional advice from an insurance broker or agent
to protect you from the potential problems and pitfalls that can
arise. They are legally obliged to help ensure you choose the
best products for your needs and at the most cost effective
price.

All business will need some form of insurance. Policies
can be bought independently or some insurance organisations will
provide policies that incorporate the various key elements required
to protect a business. These are known as "All Risk" policies
- an agent, broker or Insurance Company will give you more
details.

You're business is legally required to have some types of
insurance cover for example motor insurance or employer liability
which is a compulsory insurance if you have staff. Also
it's good business practice to insure business premises, your
equipment and your stock against fire and theft. Additionally
you might wish to insure key members of your team against injury,
accident or ill-health.

So what Insurance do I need to get for my
business?

It is important and cost effective to assess your particular
businesses needs before you buy any policy. An independent
insurance broker who is familiar with your business sector can help
you select the right level of business cover for you by assessing
the business risk and they will try to find the best deal.

Below is a list of some of the business insurance policies
available and a brief note on what they can cover. This list
does not cover all types of business insurance available but simply
provides a selection of the most common types.

Employer Liability
Insurance:

If you employ one or more employees, it is a legal requirement
to have Employers' Liability.

All employers are legally obliged to take out Employers'
Liability to insure against their legal liability in the event of
disease, injury or death, sustained by any employee arising from
their employment. Employer's Liability also covers anyone
under a contract of employment, including trainees, apprentices and
anyone who may be hired from a third party.

(If the employee/s are a husband, wife or other close relative
they may be exempt, but it is very important to check this
first).

The minimum legal requirement is £5 million and the certificate
has to be exhibited in the workplace. Failure to show the
Employer's Liability insurance certificate is a criminal
offence.

Professional Indemnity
Insurance:

Professional Indemnity also known as PI or PII, is for
individuals or businesses that provide professional services,
advice or design work, such as accountants, lawyers or
architects.

If, as a result of the services provided, an error, injury or
negligence occurs and a client or third party suffers any damage or
loss, professional indemnity should be in place to cover the
business against any financial claims for damages and legal costs.
The level of professional Indemnity will depend on the type of
service or consultancy provided. Some government departments
will insist that the business or consultant has professional
indemnity in place before they are allowed to work with them.

Public LiabilityInsurance:

Public Liability Insurance covers a business's legal liability
to pay damages in the event of a member, or members, of the public
being killed, injured or any damage to their property, resulting
from any activities carried out by the business.

Public Liability will also include cover for legal fees and any
expenses that may be incurred. The minimum Public Liability policy
cover is £1 million. However, the amount of Public Liability
cover a business should consider will depend heavily on the type of
business and the possibility of multiple injuries, deaths or
widespread damage resulting from actions by that business.

Product Liability:

Product liability insurance should be taken out if a business
sells or repairs products and the business can be held legally
responsible for any injury or damage that may occur due to defects
which may happen through design fault or manufacturing error.
It is a criminal offence to provide unsafe good as stated in The
Consumer Protection Act 1987

Key Man
Insurance:

Generally know as keyman insurance and often overlooked.
If a business has an individual or individuals who play
a key role in the organisation and their loss through death, injury
or long term/critical illness, will have a major impact on the
running of the business, a key-man insurance policy pays out a sum
of money to the business that could be used to cover:

the potential cost of hiring temporary staff

recruitment costs incurred replacing a key member of the
staff

potential financial losses due to losing a key profit maker for
the company

the cost of securing shares owned by a deceased member to
protect from dilution or control of ownership

protection against those who may have been liable for Personal
Guarantees

Business Interruption
Insurance

Business Interruption insurance is a policy that comes into play
should a major event such as explosion, flood or fire, prevents a
company from performing their normal day to day duties. Business
Interruption will cover any gross profit shortfall additional cost
incurred as a result of the disruption or covers In the
event of a major problem with your workplace - fire or flood for
example, which mean you cannot access your workplace to carry out
your duties, this may have a major impact on your business
potential profits. This policy covers you for any gross
profit shortfall based on a pre-determined sum and any additional
costs incurred due to the disruption.

Directors' and Officers' Liability
/ Indemnity Insurance

Directors, officers and managers of a business are potentially
at risk to unlimited personal liability based on the UK Companies
Acts of 1985 and 1989. They can be held personally liable for
their actions in certain circumstances and should they have
inadvertently acted inappropriately or failed to carry out their
duties and/or responsibilities, they may leave themselves open to
legal action.

Directors may also find themselves in this position through the
acts of a fellow director or officer of the company. A directors'
and officers' liability indemnity insurance policy would provide
cover for potential compensation claims and legal costs.

Trade Credit
Insurance:

Although a company can have good credit control officers or have
Factoring or Invoice Discounting facilities to help with cash flow,
sometimes one or more of their customers may get into financial
difficulty and may find it impossible to pay for services or
products provided. This has an obvious impact a business bottom
line. Also should a company's suppliers go into liquidation or
bankruptcy this too can have negative effect on the company's
ability to provide a service and again have a detrimental impact on
the company's bottom line. Trade Credit Insurance Cover can protect
a company against bad debt or late payment risks and provide the
business with working capital.

Buildings or Premises
Insurance:

A business should protect their premises against potential risks
such as fire, theft and perhaps even flooding. The level of
buildings insurance cover required is likely to depend on whether
the premises is owned by the company or leased. If the
premises is a rented property, then depending on the agreement,
your landlord's policy may provide cover - but you should
check.

Buildings Insurance cover will look to cover the costs
associated with repairing and replacing the building, including
demolition and clearing, if necessary. If you work from home
you should check to make sure that your home policy includes cover
for your business.

Contents Insurance:

A contents insurance policy will cover the business for loss or
theft of company property such as fixtures and fittings, office
furniture, IT equipment, plant, machinery, stock etc. In
general the contents insurance policy replaces on a new for old
basis, however it is possible that business equipment can be
insured on an indemnity policy which will take into account wear
and tear on the equipment when a claim is made.

Motor / Fleet
Insurance:

Any business that uses vehicles for business purposes are
legally obliged to have a minimum of third Party, Fire and Theft
Vehicle Insurance in place on all vehicles.

If a business has more than five vehicles in its fleet, it is
possible to negotiate a Fleet Insurance Policy. This may save
the company money but the cost of the policy will be based on the
amount of claims the Fleet has incurred. A rating factor will be
attributed and this will contribute to assessing the premiums the
Fleet Insurance company will charge.

It is a legal requirement to insure a company's liability for
injury and any damage to other parties and their property caused by
a company vehicle. Third party, fire and theft is the basic Motor
Insurance cover acceptable. However a Comprehensive Vehicle
Insurance Policy will also cover any damage to the company's
vehicles.

Goods-In-Transit
Insurance:

Goods In Transit Insurance is for companies that are involved in
transporting products, goods valuables or cash. The Goods In
Transit policy may be structured to insure an individual value
limit for each vehicle or for the value of an individual
consignment. The policy will cover for destruction or damage to the
goods and includes accidental loss. It will also include the cost
of alternative transport requirements if necessary.

Product
Recall:

Product Recall Insurance should be considered in the event that
a company finds that one of their products is faulty or it is
suspected to be, then they may have to recall the product from the
market. A product recall insurance policy would cover the
cost of the recall including associated cost such as product
warnings in the media or, if applicable, cost associated with
repairs.

Employment Practice
Liability:

If for some reason a company has to dismiss a member of your
staff and they claim unfair dismissal or discrimination an
employment practice liability policy will provide cover for
potential costs incurred.

Employee Business
Travel:

If employees travel abroad on behalf of the company, Business
Travel Insurance could prove to be a valuable investment. In the
event of any unforeseen issues from last minute cancellations, loss
of property to medical bill, personal liability or legal costs,
Business Travel Insurance would help your staff go about their
business safe in the knowledge they will be able to sort out the
majority of issues that may arise.

The insurance policies above are some of the more relevant
policies that you should consider for your business. There
are other policies that may be relevant or useful to your
business. A good insurance company, broker or agent will be
able to inform you of relevant and beneficial policies for your
business.

Who should I speak to about my
business insurance?

There are many options to choose from there are:

Independent Broker or
Intermediary

An insurance broker acts as an intermediary between your
business and the insurance companies. They may have been
recommended to you or you have found them online or even the phone
book. Which ever route brings you to the broker make
sure you choose one that is experienced in your particular sector.
Brokers use their knowledge of the insurance market to
find and arrange suitable business insurance policies.
Insurance brokers tend to be independent and offer products from
more than one insurer to ensure that their clients get a good
deal.

Insurance Broker
Websites

These have there own questionnaires that generally will ask for
detailed information. There may be as many as six or seven
pages to be completed so you need to make sure you have some spare
time and that you have all the relevant details required to
complete these forms. However the Insurance Broker sites are
able to give you more precise quotes to suite your requirement.

Brokerage Firms

These will be made up of a team of insurance brokers who may
have various fields of experience and offer a wider range of
products for both personal and business products. Brokerage
firms can vary in size from a small team a few people to groups
with several hundred brokers working under one umbrella. One
of the benefits is that they are likely to have person situated
close to your geographic location so you can have a local account
manager and establish a good working relationship.

Comparison sites or
Aggregators

With these websites you fill in some basic details about your
business insurance requirements on their sites. They provide
a list of possible quotes from various insurance companies.
However you should be aware that the prices that they show
initially are based on many assumptions about your business and
consequently is an indication of premium and policy. You will
be required to complete a more detailed application to receive an
accurate offer.

Lead Generation
Websites

There are companies such as Incisive Business that take relevant
essential details about your insurance requirements and based on
your responses we match your needs with our panel of advertisers
and introduce you to insurance companies who will want to speak to
you.

We inform relevant insurance companies about the type of
insurance you're looking for and arrange for them to call you
within 48 hours to discuss how they can help.

By talking to you they can gain a fuller understanding of your
business insurance needs and then provide you with a relevant
policy.

Trade Associations

If you are a member of a trade association they may be in a
position to help you find a relevant insurance provider who
understands your industry and therefore will already know what is
suitable for your business and there may be special insurance rates
for your association.

Insurance Agent

Similar to an insurance broker but an agent is usually
restricted to working with one insurance provider. Although
they will have a good understanding of your needs, they will be
limited to the range of products provided by their particular
insurance company.

Both Brokers and Agents may charge a percentage of your premium
for their service. They may also receive a payment from the
insurance company for writing the policy. However it is your
right to ask for details of how much they are earning from your
account and how their commission is structured. They are
legally obliged to tell you to show that there is no conflicting
interest when they chose your particular provider.

Some things to consider when looking for
business insurance

Start by Identifying before hand what are your minimum legal
insurance requirements.

Review your business activity and assess the potential impact
if certain things went wrong; for example loss of a key person,
business interruption, bad debtors, stock loss etc.

Look at ways you may be able to lessen the impact of these
potential risks. Consider what procedures should be in place
such as credit control; health and safety standards to protect
workers; security systems to protect premises and equipment and
disaster recovery procedures.

Obtain valuations on property, equipment and data.

Have prepared all the relevant information required to discuss
your needs with the broker; make sure you have the necessary
financial details to hand, payroll, turnover and profit data.

When you're reasonably confident you have a good idea of the
types of cover you will require make sure it's in a format that can
be given your advisor as this will help speed up the process and
enable more accurate quotes.

Choose an advisor who has good experience in your business
sector and if possible conveniently located near your place of
business.

Get the contact details of the people who will be working on
your account.

Ask for a breakdown of commissions, fees and any other benefits
that your advisor or broker may be receiving as a result of your
business.

Ask for the advisor or brokers Professional Indemnity or Errors
and Omissions Insurance policy. This is the protection they should
have in order to protect you should they make a mistake with your
policy that results in a loss to your business.

Consult with your broker and explain your situation and
whatever you believe is the type of insurances you require. A
good broker will ask some probing question to ensure that
everything possible has been covered and your business risks
minimised.

When answering the questions on an insurance application form
it is imperative to act in good faith as a proven misrepresentation
will invalidate any claim you make in the future.

Obtain three or four quotes from different providers on a like
for like policy including any excess payments, so that you can make
an informed decision about the provider you want to use.

When you have chosen your policies, document the renewal
instruction and work with the broker to ensure that you receive all
the relevant policy documents and that your policy starts on
time.

Confirm with your broker the claims reporting procedures and
document these. Agree the procedures for monitoring claims if
instigated, including timeline for regular status updates of the
claims.

Maintain a close relationship with your broker and keep them
informed of any changes within your business that may affect your
policies.

Keep detailed records of any issues that resulted in a claim;
this will help you to prevent any reoccurrence of the incident in
the future.

What if I don't understand the jargon for
my Business Insurance?

There can be a significant amount of technical terminology and
jargon involved in business insurance, but the following websites
have a list of terms and their explanations, which will help:

Buyers guides

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